I have invited the barangay leaders to join in these ceremonies to remember the 21st of September which we have denoted as Thanksgiving Day. I say thanksgiving because, as you know, it was on this day that you and I by compact agreed to create a new nation, strengthen the Republic, and meet the threat that would have destroyed the work of centuries. It is with a sense of fulfillment, a feeling of satisfaction and of achievement that I address you today, but it is not unmixed with a little anxiety.

Two years ago we sought to transform our nation. We established what we called the New Society. We created hope out of despair.

We gave every man, woman, and child in this country not only a new hope, not only a new promise, but also a new charge, a new responsibility, a new burden. We gave our people a new vision of what they are, but more than this, what they can be. We sought to teach them the meaning of one nation, claiming the labors of all her children for a common feeling, a common dream, a common destiny. But at the same time, we sought from everybody not only dedication but sacrifice.

I am very happy indeed to listen to Atty. De Guzman make the pledge, in the name of all the barangays to strengthen the Republic and to attain the dreams and vision of the New Society. I am happy to receive the pledge of all the baranggays—33,000 in the rural areas, 8,000 in urban areas—to dedicate themselves to one thing—sacrifice, not for self, not for family, but sacrifice for the nation, sacrifice for the country.

I have invited the barangay leaders to join in these ceremonies to remember the 21st of September which we have denoted as Thanksgiving Day. I say thanksgiving because, as you know, it was on this day that you and I by compact agreed to create a new nation, strengthen the Republic, and meet the threat that would have destroyed the work of centuries.

I am happy to hear that your faith shall not be shaken by any temporary reversals or setback, however long these might delay the eventual victory. In a sense that victory is already here. But there are faithless men, whose arrogance and indifference to our goals are still a source of anguish on the part of many in our country. It is a faithlessness that goes against the very roots of our reforms and will surely return us to anarchy, the corruption, and the special privilege we have dislodged from our society.

I have spent many long nights on the persistent cancer of our society. I am sure many of you, like me, feel this with deep personal affliction.

Yet this is a problem that cannot be wished away. We solved it once, but it recurs and sometimes it comes back bigger and more difficult. And so I have traveled in the past year throughout the land. You have seen me amongst you.

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I have met with our people and talked to them of their expectations and dreams, what they want government to do for them, what they expect to get from our New Society. I have heard the same voice, repeating itself over and over, seeking an end to exploitation, injustice, poverty, and the reign of privilege. I have seen the same face, worn-out by betrayed promise and hope, begging for the attention that has been promised the small man for whom the democratic revolution was launched. I have seen the impatience and sometimes the frustration of farmers and workers who look to much more than what they are getting or what they used to get from the very men and women and the institutions which are supposed to serve them.

And I have retained in my heart the lament of those who feel that only the President cares, only the President listens, only the President acts. And I have come to speak to you of this today.

For this is not the transformation that we have sought. This is not the change that we want. The society we seek is not one in which compassion, justice, and duty come alone from one man, the President, but one in which all these may be expected from everyone, bureaucrat and citizen alike.

Our support for the New Society will be known not by what they say of our leaders in government, but by what we do to share their responsibilities. Our people need less of men who will say the New Society is good but more of men who will contribute what they can to give meaning to our efforts and to our words.

This is why I feel, more than ever, the need for us to close ranks. To unite in the awareness that the gravest threat to our nation today is not the problem of rising costs (although this is a serious one; it may create a crisis), but the more urgent and the more serious threat against our Republic today and against our New Society, is that of our slipping back into the mire of factionalism and selfish individual privilege. There are some who believe that once the efficacious powers of martial law are exercised and applied on the violent threat to the state, then, once again, they are free to make use of the improved situa­tion to pursue the fruits of special privilege that they once knew.

This, to me, is a grave threat.

Where before we were a nation divided into disparate and mutually irrecon­cilable groups, today we seem to have divided into three factions, each one distinct from the other.

The first, which is in the majority, consists of those who feel whole­heartedly involved in the effort to make our New Society a lasting and viable reality. They are those who have placed all their hopes, their dreams, their lives, their property, their honor in the New Society. To this group belongs most of the barangays.

The second is a combination of elements which question the right of the people to benefit from any kind of change without having paid the price of blood. They are the subversives of the Left, the conspirators of the Right, the parroters of foreign ideologies, the secessionists in our midst. And they have to be contained.

To unite in the awareness that the gravest threat to our nation today is not the problem of rising costs (although this is a serious one; it may create a crisis), but the more urgent and the more serious threat against our Republic today and against our New Society, is that of our slipping back into the mire of factionalism and selfish individual privilege. There are some who believe that once the efficacious powers of martial law are exercised and applied on the violent threat to the state, then, once again, they are free to make use of the improved situa­tion to pursue the fruits of special privilege that they once knew.

The third, though small in number like the second, has a role to play in the development effort, but does not have the zeal, the patriotism, and the sincerity to build a strong, prosperous, and disciplined egalitarian republic. While martial law assures the safety of their properties, if not their lives, they see more profit for themselves in the restoration of organized corruption, privilege, and in the social clash of selfishness and of greed. They have not found their place in the democratic revolution, and have chosen to be left out. By dissembling, however, by making it appear that they are in the revolution with us, with the President and with the barangays, they have made our democratic revolution the sanctuary and the refuge for selfish privilege.

These include, in high or low places as well as in government and private sectors, among the civilians as well as in the military establishment, those who traffic in power and privilege, who pay lip service to our programs yet place themselves and their interests above such reforms, especially where the latter exacts the price of self-abnegation, personal sacrifice, or even inconvenience.

You and I know who they are. You and I recognize them for what they are. We deal with them, we have seen them. They not only hurt themselves; they hurt us. It pains me to see that there are Filipinos capable of such treason and such treachery, few as they may be.

They have caused much of the cynicism that has begun to be sown once more in our midst. They are to be feared more than those who seek to bring down the government and replace it with something that would transform our people into ideological robots. I respect an ideological opponent more than the treacherous dissembler who makes it look as if he has joined our ranks and then hits us from behind and in the back. Those who believe in their own ideologies contrary to ours at least enslave in the name of deliverance. But the enemies who lurk behind government desks or move in the corridors of power eat and erode the gains made by the patient toil, the sacrifice, the discipline, and the solemn faith of men and women who have put all their dreams and hopes in our cause.

If we concede it our duty to attain unity of purpose and of will to succeed, then we must now rid our ranks of these unreformed men. Let all kinship and friendship in the democratic revolution now receive guidance from the philosophy and purpose of our revolution. Those who continue against the moral substance of our reforms must now answer to our people. And thus, I have chosen this forum for you, who represent the people more than any other body. Let them answer to you then, to you the people’s assemblies, the barangays. Let them answer to you, or face the avenging angel of the people’s wrath through their government.

I have come to you today to make this pledge, as the instrument of the people’s will, and as one who governed and exercised the powers of President only by virtue of the decision of the people. And I will exercise those powers only as long as the people so dictate, and no longer. As the instrument of the people’s will, I hereby solemnly pledge that I shall dedicate myself in the next 12 months to the removal from government of men and women who have misused their offices.

Let all men take heed. Friendship, relationship, previous achievement will not constitute any immunity towards the just and proper punishment of those who undermine the democratic revolution.

In this, I am confident of your support.

Only by putting this distortion out of the way can our nation proceed to accomplish greater tasks. There will be no witch-hunting. There will be no red-baiting. We will not engage in rumor-mongering. We will be fair. We will be just, and that is why I thought of calling a Pulong ng mga Barangay.

Let us trace our history. We are a country by the will of God and yet we are separated by a small stream of water from the mainland of China, from Malaysia, Vietnam, and Thailand to the west, Indonesia to the south. It is said that our nation is only 76 years old. That is not correct. Our nation is much older than this. It antedates the Spaniards. It goes beyond the white man’s efforts to explore this part of the world. It antedates even the great Asian migrations to our islands, goes across the centuries into contact with the great civilizations—China, India, and Indonesia.

We have often looked at these facts and have often thought as if they had come to pass by luck or by chance. But geography tells us otherwise. We are an archipelago on the oceanic margins of Southeast Asia, and this unique position makes us part not only of Asia, but of the great Pacific, which serves as a corridor to the other continents. It is not an accident of history that there should have come upon this archipelago a confluence of cultures, of the Orient and of the Occident, that did not diminish but increased as the world was made smaller by the miracles of travel and of communication.

There are few islands, tossed as we are in the middle of vast oceans, which are as fortunate as we are. We were to become in time a single political community. We became one nation. God must have meant this to be. Long before some of the peoples of the continental land masses of Asia ever thought of waging sovereignty claims maintaining nationhood, we already bore the flag of nationalism and self-government. Long before some of the peoples of Asia marched to the cry of liberation and independence, we had already made our sacrifice. Revolution broke out in our islands long before it caught the imagination of our Asian brothers.

We sought to establish a Republic for we had a revolution. But unlike the French and the American Revolution, this did not reach what one historian has described as “its appointed term.” We proclaimed the Philippine Republic only to lose it to a new colonial power.

Time and again, we have asked ourselves, but why, after so much valor and sacrifice, after the death of the flower of our nationhood, why did we fall short of our goal? Why did our revolutions fail? Why? Why, after having charted the course and the framework of a Republic, our fathers should yield yet to another night of colonial rule?

The answers to these questions seem lost now to the makers of our history. But it behooves us of our generation, yours and mine, and the younger genera­tions that will follow, to find out what happened to our race. Why did we fail in times past? There seems no doubt that between the welding of a nation, the binding together of all the elements constituting the nation, and fighting a superior outside power that opposed that nationhood, the revolution was bound to falter.

But more than this, we must add a measure of betrayal of the revolution. The revolution of 1896, for instance, was betrayed by our people. This is the instability that seems inbred in the Filipino, the inability of our people to unite at the time of gravest need. In many, the seed of colonialism had been sown, and this seed would never be extirpated from their soul and from their body. Many found in this seed a drive for gain and it mattered little if it was not shared by the homeland. And this is a theme, this theme of discordance, of disunity, of factionalism, of rivalry, of selfish ambition—this is the theme that would haunt us for all time, all these 76 years.

Every time the nation was confronted by anything less than total extinction by war, the nation was divided. Yes, there was some kind of unity. Hindi ba ninyo naalala noong World War II. Nagkaisa tayong lahat laban sa Hapon. Hinarap natin ang mga pumasok sa ating bansa. But, even in the middle of the fighting, do you remember the experience of the underground? Do you re­member the experience of the guerrilla leaders? How many guerrilla leaders were fighting one another instead of fighting the common enemy, the Japanese? How many? You ask yourselves. You and I were participants in this drama.

Disunity was the theme that kept repeating itself, throughout our history, and it shall continue to be repeated in our history as a nation unless today, you and I, now fully resolve that we shall root out the causes of factionalism and disunity in our country and unite as a people to establish a true and effective Republic.

After the Revolution of 1896 we matriculated in the American school of self-government. For 26 years, we bought the idea, borne home to us by the new master, that for our people to rule themselves we must first learn how to govern. Many of us will continue to marvel at the irony, of course, that a people who had brought to world consciousness the historic right of revolution of a colonized people, now presided over the subjugation of another.

Every time the nation was confronted by anything less than total extinction by war, the nation was divided. Yes, there was some kind of unity.

The Philippine Revolution went underground, for that revolution which failed in 1896 lived in some hearts. It lived in the hearts of the people who participated and their children to whom they imparted the knowledge of revolution.

I still remember when I was young, my grandfather used to take me on his knee and tell me of the battles of the Revolution. How Luna was killed in Cabanatuan and how he helped picked him up. And the mountain camps that they established in the Sierra Madre and the Cordillera, where it was best to stay away from the malaria-infested regions. These were traditions that were carried over to my generation. Many of us remember this. The Philippine Revolution, however, went underground. It was left only in me memory of those who were fascinated by the efforts of our people to be free and to establish their own government and their own kind of society.

In time, the desire for independence would revive but it would revive in more peaceful manifestations, like petitions to the American colonial government; it was never again to issue in a collective and violent struggle. Instead, we negotiated our way to independence.

In 1935, the terms of transition from colonial status to self-rule were estab­lished. The Commonwealth government under the leadership of Filipinos was inaugurated; we began to tinker with the mechanism of running our own affairs. The air was rife with dreams about to be fulfilled. But even then, if you will remember, even then, there was to be noted the seed of internal struggle in the new nation about to emerge. Colonialism had implanted a system of privilege and power that inevitably divided the people into classes: ruler and ruled, rich and poor, strong and weak. The various administrators, among them President Quezon, seemed to realize this and they sought to implement a program which has been called social justice. But unfortunately, all the efforts fell very much short of the objective.

The opportunity was there for the country to commence on the road to real democracy. But events and circumstances conspired against it. Hungry for independence and self-rule in whatever form it may have been bequeathed to us, whether negotiated or exacted by heroism in combat, we did not aspire further. We looked only at the face of colonialism and did not bother to inquire about the fundamental issues of social life that would inevitably come with independence.

For we were in the period when we believed that political emancipation was the answer to all the problems of nationhood. Now, we are aware that political emancipation is merely the beginning of nationhood.

And then war broke out in Europe and finally in the Pacific, and it was our fate to be drawn into that war. While in other parts of colonial Southeast Asia, Japanese militarism drove a wedge into the footholds of colonial empire and therefore encouraged nationalist collaboration with it, the Philippine response was fatefully different. With independence arranged for us by 1946, our people fought not the entrenched occupant who had promised independence in 1946 but the new invader, the Japanese.

Whatever her imperialist ambitions in Southeast Asia, however, Japan heralded the liquidation of colonialism in the region. Japan was opposed by us and yet, ironically, Japan caused the liquidation of colonial empires in South­east Asia. And the world emerged from this war completely different and with a completely different vision of the world to come—new leaderships, new visions, new dreams, new aspirations, new countries, and new people. For us who envisioned independence as an orderly, quiet, and phased deliverance, the war left behind a painful awareness that the business of becoming a strong and progressive nation is affected by the policies and behavior of other nations.

Then, we discovered the lesson that our fathers should have taught us after the revolution of 1896. And this lesson is it is easy to fight a war. It is easy to fight a revolution. It is even easy to win it, but it is hard to run a government. It is harder. It requires more courage to run a government with a determined and resolute objective, to maintain the dignity and independence of individuals and of a nation than to fight a war, to fight in Bataan, in Corregidor, in the battle­fields, in the mountains. These our forebears had learned in 1896. Un­fortunately, there was no one left to articulate to the succeeding generations that this was so. We had to learn it ourselves. We are learning it now.

For war had left devastation, confusion in our midst. And freedom brought many burdens in its train. It was not the setting that was to prove kind to the experiment with Western democracy in our land, we know that now. Where the framework called for slow and orderly transition from the old to the new, from underdevelopment to development, the postwar problems were of a scale and magnitude that required sweeping, radical measures.

The history of our country since 1946, therefore, tells us that such an orderly course would never take place. We grew, in the interval, from our innocent belief in the system to the recognition that no form of economic development could take root in our country, unless premised on the broader scale of social transformation. We tried to adopt to the system and launched one development program after another, and the sum of all of these was a legacy of instability, of cares, and escalating problems.

We refused to accept defeat, for you and I are obstinate people. It took many years for the government to perceive the defeat of the system, and it was under­standable because there sat in the high and powerful places of government the members of the oligarchy who alone profited from conditions prevailing in the country. Neither the determination of the United States to make democracy succeed in our country, nor the peaceful electoral transfer of power from one national leader to another, availed. Worse, the failure only multiplied the problems, and by 1970, we faced a real crisis of survival. Growth was to be won through an inevitable convulsion of the national soul.

It is easy to fight a revolution. It is even easy to win it, but it is hard to run a government. It is harder. It requires more courage to run a government with a determined and resolute objective, to maintain the dignity and independence of individuals and of a nation than to fight a war, to fight in Bataan, in Corregidor, in the battle­fields, in the mountains. These our forebears had learned in 1896. Un­fortunately, there was no one left to articulate to the succeeding generations that this was so. We had to learn it ourselves. We are learning it now.

The convulsion began with the steady decay of social life. I need not go further. Into this situation came the open assaults upon the government. In a strange meeting of minds, the Left and the Right, two otherwise clashing groups joined forces to sow anarchy, eliminate the President, dissolve the Republic of the Philippines, and in its stead sought to establish what they believed was going to be a strong government. They did not perceive the sentiments of our people.

There was only one choice that remained and that was martial law, unfortunate term that it is, martial law connoting oppression, injustice, dictatorship, and the rule of one man without the authorization of the people. But notwithstanding the fact that even then, before the proclamation of martial law, we know, you and I knew, that the entire culture of the West would rise up in criticism, in denunciation, nay in harassment of our efforts and experiment; knowing full well but bound to the terminology of the Constitution, a Constitu­tion that we did not write, but a Constitution that was borrowed, lifted verbatim from Western minds and Western intellects; knowing this and realizing perhaps the lack of verbal felicity of those who had written the term martial law; knowing that we would be pilloried and crucified for proclaiming martial law; realizing that this was the price that we had to pay in order to save the Republic and save the people, we proclaimed martial law.

Now, let me go into the problems and the strategy for survival. The barangay is the ultimate or the smallest political unit in the country today. There are 33,000 of them in the rural areas, about 8,000 in the urban areas. However, there is confusion. Under the new Constitution, the smallest geographical unit is called the barrio. So, we have the barrio captain, barrio council, barrio assembly. What is the difference between the barrio and the barangay therefore? This confusion has resulted in many requests for clarifica­tion coming to me. And these requests, my friends, have caused us therefore to move into this area which I now call the clarification of the status of the barangay, and today I have decided to issue these decrees.

The barangay as a political unit is the organ through which the popular will is expressed. In the words of Presidential Decree No. 86-A, issued in January of 1973, it is “[t]he vehicle for expressing the views of the people on important national issues.” The barangays are therefore more representative than a national legislature or the National Assembly, and they are more expressive of the popular will.

However, there has been confusion by virtue of the use of the term barrio in the Constitution, resulting in some instances in two sets of local leaders with conflicting jurisdictions. Because of this, therefore, I hereby sign this decree, declaring that all barrios in the Philippines henceforth shall be known as barangays.

Any provision of existing laws to the contrary notwithstanding, all existing barrio or barrios that may hereafter be created are hereby declared as barangays and all references to barrios in any existing laws shall henceforth be understood as references to barangays, without in any manner amending the terminology of the Constitution.

There was only one choice that remained and that was martial law, unfortunate term that it is, martial law connoting oppression, injustice, dictatorship, and the rule of one man without the authorization of the people. But notwithstanding the fact that even then, before the proclamation of martial law, we know, you and I knew, that the entire culture of the West would rise up in criticism, in denunciation, nay in harassment of our efforts and experiment; knowing full well but bound to the terminology of the Constitution, a Constitu­tion that we did not write, but a Constitution that was borrowed, lifted verbatim from Western minds and Western intellects; knowing this and realizing perhaps the lack of verbal felicity of those who had written the term martial law; knowing that we would be pilloried and crucified for proclaiming martial law; realizing that this was the price that we had to pay in order to save the Republic and save the people, we proclaimed martial law.

But in the case of the City of Manila and other chartered cities where there are no barrios, all existing barangays therein, created under Presidential Decree No. 86 as amended, shall continue as such barangays now.

Republic Act No. 3590 as amended, otherwise known as the Revised Barrio Charter, is hereby adopted as the Barangay Charter. All powers, rights vested in or exercised by the Barrio Assembly, the Barrio Council, and all barrio officials pursuant to Republic Act No. 3590, and such other powers, rights pertaining to or conferred upon them by other laws before or after this decree shall henceforth be exercised by the Barangay Assembly. Barangay Council, and barangay officials. The officials of the barrio as constituted pursuant to Republic Act 3590 shall now be known as barangay captain, barangay council­man, barangay secretary, and barangay treasurer.

Now to resolve the possible conflict of authority between some barangays and some barrios. I hereby also sign a decree that in cases where there are any conflicts arising out of the creation of barangays, or barrios, should there be any conflict in the jurisdiction or the exercise of powers of the barangay captain, council, or assembly, such a conflict shall be decided by the holding of an election to be determined by the secretary of local government upon the approval of the President. This is only when there is a conflict of leadership between the barangay and the barrio.

I therefore sign the conversion of all the barrios into barangays.

But that is not all. The provinces, the municipalities, and the cities receive a share in the internal revenue collections of the national government. But in the past, the barangays or the barrios never received any definite share. In accordance with the studies made by the experts and without in any manner affecting the share of the province, I have organized a plan for setting aside a definite amount of money for the barangays. I have asked the Department of Finance, therefore, to implement a decree I have prepared to amend Sec. 2 of Presidential Decree No. 144, which provides for the sharing of the internal revenue collection, to read as follows: “This allotment shall be distributed as follows: 30 per centum to provinces; 45 per centum to municipalities; 25 per centum to cities, and irrespective of the amount of collection, a total for the first two years of 65 million pesos annually shall be distributed and allotted to barangays.”

Starting 1976 to 1977, however, the following allocations shall be made; 25 per centum to provinces, 40 per centum to municipalities, 25 percent to cities, and 10 percent to barangays, definitely.

We are also going to create a Barangay Development Fund. There is hereby created a Barangay Development Fund to be constituted of the annual con­tributions of not exceeding P500 per barangay from each province, city, and municipality, which funds shall be spent solely for community development projects. These funds shall be maintained in the special books of accounts.

Now, what does this actually mean? This actually means that the barangays now have their own sources of funds, but that is not all. From now on, beginning today, the barangays will also have a definite allocation from the special highway fund. Before today, the barangays or the barrios never had any share, any definite share, in the special highway fund.

Therefore, without in any manner changing the allocations, I hereby sign this decree amending Sec. 3 of Presidential Decree No. 436, providing that before the allocations to provinces, municipalities, and chartered cities is made, one-fourth of the total accruals under this section shall be set aside and apportioned annually by the President among barangays for the construction, improvement, and maintenance of roads and bridges within their respective territorial jurisdiction in accordance with a program to be prepared. As estimated by the Secretary of Public Highways, this one-fourth is about P42.5 million to be distributed to all the barangays in the Philippines for highways and bridges.

Under these two decrees, therefore, the barangays will receive a total of about P107,000,000 annually. I therefore sign this decree on the allocation of the special highway fund.

At the same time, however, we have a proposal, the proposed Local Government Code. This code is supposed to be under study in the Office of the President. I am now reviewing the provisions of this code. But because this code affects the local government, through you, I hereby endorse this code for study by all the barangays in the Philippines, all provinces, all cities, and all municipalities. I hereby transfer to this code for the study by the barangays throughout the Philippines.

Now, I have strengthened the position of the barangays. It is necessary, however, that with power and authority, with finances must go responsibility. The barangay not only is the vehicle for expressing the views of the people, it is also the instrument for greater production. Whether we face recession or worse and graver threats arising out of the world situation, food production is still the principal program of government. Whatever may happen, provided we have enough food, the Philippines will not only survive, we will progress. The principal vehicle for production must be the barangays and the Samahang Nayon. And this is where you must come in.

The record of our importations of food and rice is quite clear. How much did we import in food products from 1967 to the present? Let me read them to you: 1967, $100,206,000; 1968, $132,712,000; 1969, $124,504,000; 1970, $103,539,000; 1971, $145,815,000; 1972, $174,963,000; 1973, $202,073,000; 1974, $175,917,000.

How about rice? We imported in 1971, P265,726,000 worth of rice; in 1972, P345,852,000; in 1973, P600,716,000, and in 1974, P345,852,000.

We face therefore this reality: Our efforts have not wiped out the deficits in our food requirements. We have been spending hard-earned dollars for food which can be produced here in our country. There is no reason on earth why, notwithstanding the floods, notwithstanding the typhoons, notwithstanding the natural calamities, the Philippines cannot produce the food that it requires.

We must now dedicate ourselves to the solemn task. And for this purpose, we need every hand. We need total concentration and immediate action. We need the barangays. And this is the reason for the strengthening of the barangays today. There are, I repeat, 33,956 barangays all over the country which coincide with the legally created barrios under the revised barrio charter. In addition, there are more than 8,000 barangays in districts or wards of chartered cities, the so-called urban barangays. We have not only increased the income of the barangays; we have given the leaders as well as the members thereof a greater leeway of authority.

Now, I have strengthened the position of the barangays. It is necessary, however, that with power and authority, with finances must go responsibility. The barangay not only is the vehicle for expressing the views of the people, it is also the instrument for greater production. Whether we face recession or worse and graver threats arising out of the world situation, food production is still the principal program of government. Whatever may happen, provided we have enough food, the Philippines will not only survive, we will progress. The principal vehicle for production must be the barangays and the Samahang Nayon.

Inasmuch as three-fourths of our people live in the rural areas and draw sustenance from agriculture, we shall now, as a matter of the highest priority, endeavor to realize our full potential in agriculture, principally food produc­tion.

We shall mobilize by so doing a tremendous force against stagnation and that terrible malaise which descends upon the people endangered by a turbulent economy. Did you know that 62.5 percent of our people are below the age of 25? We are a young country. There is no reason therefore why the great majority of our people cannot be devoted to productive enterprise. And yet, only a part of the entire population is engaged in production. This is one of the basic deficiencies of our country and our economy today. The barangay and the corresponding Samahang Nayon are the answers. Of course, we must adopt a youth development program. And today, I am also going to create a new department in government, the Department of Youth and Sports Development. I am going to sign this in your presence.

An unfailing indicator, or symptom, of a country’s deterioration is a mass of aimless dazed or dissipated young people. We are aware of our experience in the recent past. Our youth development program, therefore, should instill in our young citizens the values of respect and discipline. And we must engage their minds in work that will produce benefits for themselves.

And that is why we have this balanced economic policy. We support industry, but more than this, we must support agriculture. As you know, in industry, we have been advised that most countries are moving timidly in setting up new enterprises and expanding the economy. In our case, we have made a different choice. We are moving boldly. We have anticipated these problems. We borrowed money last January. We borrowed about $700,000,000 and about $400,000,000 of acceptances. We must look towards a bold pursuit of our national development.

I hereby announce today that we will not in any way reduce our efforts at infrastructure development, but we will change the priority. Infrastructure will be devoted principally to production. We must look towards a bold pursuit of our national development program as the permanent solution of our problems. This means a high level of productivity and its equitable sharing among individuals and communities.

So, we must expand agriculture and industry. Our yearly capital require­ments are anywhere from 400 to 500 million dollars. We have four sources of capital: foreign exchange earnings; external sources in the form of foreign loans and foreign investments; domestic investment; and national savings. These components of the capital structure of the economy all registered decisive increases during the last two years. Because of the international pressures on our economy, there is need to restudy all of these. Adjustments must be made in capital development.

First, substantial increases in petroleum products and capital equipment have reversed the favorable trade balance and severely strained the foreign exchange earnings of the country. At the end of the year, we will have a deficit in our trade. There will be an estimated $38 million deficit. We are fortunate, however, that the high level of our international reserves—$1.5 billion—cushions the impact of this blow and allows us time to cope with this difficulty. In the coming year, we must enlarge our efforts to increase our export earnings.

Second, the country’s capacity today to service external debt has reached new limits. Our policy, therefore, is this: We shall avail ourselves of foreign loans only if they are within the capacity of our economy to service them in an orderly and consistent manner. Government borrowings at this time must stand still. Instead, we have augmented guarantee facilities for long-term borrowings or deferred-payment imports of the private sector. This has been done through the establishment of the Philippine Foreign Loan Guarantee Corporation, with an initial capital of P1 billion. This corporation will be an effective conduit of foreign capital for national development.

Third, the unprecedented volume of foreign investments that has entered the economy will be further stimulated by new incentives. Policies on sharing, repatriation of capital, and tax exemptions shall be supplemented with vigorous measures on an industry-to-industry basis. We shall expand the areas in which foreign investments can take part to include more export-oriented projects. Portfolio investors will be encouraged through the transformation of more companies into truly public corporations that will ensure easy cash conversion of investments.

Fourth, we must intensify the campaign to increase national savings and domestic investments.

Of course, our basic approach has always been the promotion of export-oriented industries. We will continue with this program.

There are many other policies which I need not go into. I can only add further that there will be acceleration of the growth of our external trade by moving into products that will find a market even in a receding world economy.

There will be an integrated export promotions program abroad and efficient surveys of foreign markets; the rationalization of transport movements; the utilization of Eastern European ships and nonconference liners in trade transport.

Now, we go back to agriculture. Two-thirds of our exports are agricultural products. We must now continue the development of commercial farm produce to a level even higher than what we attained before.

We are now going to move into processing these agricultural products: copra, wood, and the like. We have moved on agrarian reform, and I need not go into this I will make a more detailed presentation of agrarian reforms when we inaugurate the proclamation of land reform sometime in the later part of this month.

But now, I would like to move into what I consider one of the most important pillars of agricultural development, which is the Cooperatives Development Program. Our agrarian reform program, to be faithful to our hopes, and to liberate our farmers from bondage rather than imprison them in failed expectations, must now move swiftly in rural areas. We must now replace the old institutions with new ones. The old system of ties based on paternalism must now slowly give way to broader fraternalism, in keeping with the spirit of our changing rural society. We must now provide new institutional mechanisms to make community action come to life.

I noticed that there was difficulty in the organization of cooperatives, not only because of some misunderstanding, in the national level offices, of the purpose of cooperatives, of their venue, of their jurisdiction and their capabilities, but also because of the timidity of the barrio and barangay leaders.

I have taken this opportunity to tell you that in addition to the authority that I have vested in the barangay today by virtue of the decrees that I have signed, I place on your shoulders, therefore, this responsibility, this burden corresponding with the authority that has just been granted to you. And that is the movement of the Cooperative Development Program forward at an accelerated pace.

As you very well know, we are trying to broaden the economic base of our country. Before, we had the landlords. We broke the system up. We broke up the vast landed estates. And at the same time, however, those landowners were given the means by which to go into the industry. Now, what will happen? They will use their management talent to move into more profitable enterprises, more profitable than agriculture.

We might end up with an economy where again the same group of oligarchs controlling the more profitable portion of our economy, which is industries, trade, commerce, banking, and the like.

We have as of today, a total of 10,419 Samahang Nayons, in 15,729 barrios throughout the country. These have a total membership of 559,054 and an accumulated capital of P5.6 million derived mostly from membership fees. The Samahang Nayon is the first phase in the movement towards the building of cooperatives. After this, the Kilusang Bayan comes next. We have now entered this phase. We must now enter this phase, and I am asking you, the barangays and the barangay leaders who I have just vested with authority, with power and with funds to participate in the effort at moving from this phase of Samahang Nayon into the phase of Kilusang Bayan.

Through the Samahang Nayon, we have broken ground for the emancipa­tion of the rural worker from feudal inequities. As the barangay vests in him political power, the Samahang Nayon now vests in him economic power. Under the roof of the Samahang Nayon, the farmer is able to locate himself permanently in a system that provides organized credit assistance that assures him of seeds, fertilizers, and other inputs, as well as marketing assistance that assures him of better prices for his produce. Through the Samahang Nayon, the individual capabilities of the small farmers and workers are pooled together so that they can provide for the future of their families through cheap insurance, banking, and other schemes that may be capitalized from a share of the fruits of their labors. Through the mechanism of the area marketing cooperatives of the Samahang Nayon which have been organized in at least 10 provinces, we hope to see the farmer get more for his farm produce while at the same time cutting down the cost to the consumer. Did you know that the farm products that come from you in the farms increase in price by 250 percent when they are sold to the consumer? Example, cabbage, when it is sold to the laborer in Tondo, is sold at P1.21 per kilogram. But the farmer gets only P0.44 for it in his farm in Baguio. Ang magsasaka, apatnapu’t apat na pera lamang ang ibinabayad sa kanya nguni’t pagdating sa mga manggagawa at ipinagbibili sa manggagawa, isang piso at dalawampu’t isang pera ang bayad. Eh sino ang kumita? Sino ang mas malaking kita, iyong magsasaka, o iyong tindera, o iyong trader, middleman? Sinong kumita ng malaking pera? Ang middleman, hindi ang magsasaka. We can no longer tolerate this. We can no longer tolerate the middleman getting more money than the one who works to produce the product, the farmer. It is therefore necessary that we now accelerate the implementation of the program and we create the machinery through which the farmer, let’s say, who sells his cabbage will get not 44 but perhaps 60 centavos while the consumer will pay not P1.21 but P0.80. Through this, we hope to effectively cut down the inter­vention of middlemen. So, we must move into the next stage and that is the Kilusang Bayan.

The Samahang Nayon today must now evolve into full corporate entities attaining economies of size with one corporate plan, one management, one source of funding, where the members will not individually have to worry about their fertilizers and seeds and other inputs of production, or the marketing of their individual products, and where all these will naturally flow from tie-ups between producers, cooperatives, and consumer cooperatives and the National Food Terminal Market. And this is your responsibility.

Through the Samahang Nayon, we have broken ground for the emancipa­tion of the rural worker from feudal inequities. As the barangay vests in him political power, the Samahang Nayon now vests in him economic power. Under the roof of the Samahang Nayon, the farmer is able to locate himself permanently in a system that provides organized credit assistance that assures him of seeds, fertilizers, and other inputs, as well as marketing assistance that assures him of better prices for his produce. Through the Samahang Nayon, the individual capabilities of the small farmers and workers are pooled together so that they can provide for the future of their families through cheap insurance, banking, and other schemes that may be capitalized from a share of the fruits of their labors.

Alam naman ninyo, rural credit, sinasabi nating parati, rural credit, national government, Philippine National Bank, ACA, at saka rural banks, nagpapautang sa ating mga magsasaka. But if we could create cooperative banking it would be all for the better.

Rural credit is for the farmer. If the farmer is willing to finance himself through cooperative banking; therefore, we must allow the farmer to organize cooperative banks for himself. This is a policy.

I hereby announce therefore, and let all the monetary authorities be on notice, that it is the policy of the national government, of our Republic, to encourage the organization of cooperative banks by Samahang Nayon or Kilusang Bayan or the farmers themselves in order that they may finance their own activities in the agricultural areas of our country.

I therefore ask all national offices to do away with red tape and bureau­cratic obstacles in order that we can attain this objective of banding the farmers together into a corporate unity and a corporate personality which the farmer will be able to help himself.

I understand that there are new efforts to organize, for instance, a cooperative bank in Nueva Ecija with a capitalization of P500,000, and that three more are coming up in Pangasinan, Isabela, Bukidnon. I would like to commend these members of the cooperatives in Nueva Ecija, Pangasinan, Isabela, and Bukidnon. I will expect action on all of these efforts as soon as possible.

Now, my friends, one last point. I missed one decree here. It should have been signed with the rest and I’m asking you to participate in the implementa­tion of this decree, especially most of the barangay leaders here who are from the urban areas. I refer to the new decree on drug addiction.

Drug addiction is no longer just a threat. It has become a morbid and per­plexing reality. There are at least 60,000 drug addicts throughout the Philippines today. In a sense, drugs pose a greater danger than crime itself. Addiction works insidiously to destroy private lives, and ultimately the life of the nation. The youth, many of them in the schools, are particularly vulnerable to it. I have received a file of reports on drug addiction and I am alarmed. Antinarcotics squads have a full-time job tracking down the monster to its many lairs. In the past years they have turned up sizable caches of marijuana, opium, heroin, and other habit-forming drugs. The most alarming fact is that the drug traffic has become an underground or rebel activity, and it has gone deeper since proclama­tion of martial law. I mean gone more secretive because of the increased effi­ciency demonstrated by our law enforcement agencies like the NBI, the CANU, the constabulary, and the police.

The campaign against drug addiction will now be waged more relentlessly. We have already provided for stiffer penalties for violation of our antinarcotic laws. To give the drive central planning and greater coordination, I hereby announce therefore today that the barangay leaders will be asked to participate in the drive against drug addiction. I shall ask you, the barangay leaders, to help ferret out not only the drug pushers but the drug addicts, not for punishment, but for rehabilitation. Today, I shall sign a decree creating the Commission on Narcotics, a commission that shall now utilize or coordinate all the efforts of all the agencies in government including the barangay leaders to fight drug addiction.

The barangay leaders are authorized to arrest those who are engaged in selling drugs as well as using drugs. You are under mandate to report to the police and to the NBI all those who are engaged in drug addiction because there is no one who is in a better position to know what is happening in the neighbor­hood than the barangay leader. I therefore ask you to join wholeheartedly and sincerely in this effort against drug addiction in our country today.

I want the barangay leaders to hear this from me directly: I will hold you responsible if you don’t help in the campaign against drug addiction. This is too serious. You know, it’s something that I must participate in now. It is necessary that the President himself now intervene in this because we have definite information that the rebels and subversives who are fighting the government are actually utilizing drug addiction for their purposes. Drug addiction has become a matter of state security.

Drug addiction is no longer just a threat. It has become a morbid and per­plexing reality […]The campaign against drug addiction will now be waged more relentlessly.

With your help, we won’t need to worry too much about peace and order. You know what is happening everywhere. We have still the threat in Mindanao and Sulu but we are in control. Yes, there are ambuscades, you all know what is happening there, and you have the barangays. We may hear all kinds of rumors to the effect that the secessionists there are in control of everything. You know that is not true. If they were in control, I wouldn’t be here. I would be there, fighting against them. I would be staying in the field. You remember when in 1973, there was a sudden upsurge of fighting in the South; I had to go there to see if the Muslims and Christians were organized to protect themselves. We are going to try and work out some kind of a solution, a peaceful solution to all of this and I think that we are going to succeed. I cannot reveal to you now the de­tails of the efforts but we are moving towards a successful conciliation of all elements and it’s my hope that with the help of the Almighty, we will stop this fighting in the South.

Of course, subversion is like malaria. When your body is weak, it attacks the entire constitution. If we are weakened—economically, politically, socially—subversion will rise. This is the history of subversion in our country. We all realize therefore that since the foundation of our society is a civil order which allows every man to move about peacefully to attain his lawful objectives with­out prejudicing his fellowmen, inasmuch as this is the foundation not only of our society but of our reforms and programs of development we must guard it vigilantly, and in this effort your organization is essential.

I ask you to join in all these efforts because security is related to the efforts against drug addiction and the organization of cooperatives, Samahang Nayon, and Kilusang Bayan.

What has the cooperative and the Kilusang Bayan or the Samahang Nayon got to do with security? Security doesn’t merely mean military security. Today military security is interchangeable with economic stability; if there is scarcity in food, if prices go up and get out of control beyond the means of the common man, then you will have military insecurity as well as economic instability. Therefore, they are faces of the same coin. And when I exhort you, therefore, to produce more food, I think not only of economic progress—I think of stability. I think of the security of our state and of our Republic. I think of the protection and the health of our people, of our children, and those who shall follow them.

And so, today, as you will note, we have opened a new front, the diplomatic front. We have opened the diplomatic front with respect to the Middle East countries, the source of our oil.

I am certain that normalization of relations with all the socialist countries of the world will increase trade and improve our military security. I cannot explain to you the details of all the problems pertaining to this now and especially on the trip of the First Lady. But later, you will learn from me and from all other sources the result of this trip.

It is also our hope that we shall be able to finalize the negotiations with the United States. We are negotiating a trade agreement to replace the Laurel-Langley Agreement. This matter involves the military bases and involves the policies of our country. But rest assured that when your President negotiates on these treaties, he negotiates with the barangays behind him. He negotiates with your strength. He negotiates with your patriotism. He negotiates with your dignity as individuals and as a nation. He negotiates with your pledge that you offer not only your properties and your life but your sacred honor like the patriots of old in the support and protection of our country. Rest assured, therefore, that as I exhort you to do all these, so too will your President, so too will your political leadership in the country. You and I are bound to this common resolution, that our country will never wane and there will be only one guide and that is the welfare of the Filipino people and the national interest.

[R]est assured that when your President negotiates on these treaties, he negotiates with the barangays behind him. He negotiates with your strength. He negotiates with your patriotism. He negotiates with your dignity as individuals and as a nation. He negotiates with your pledge that you offer not only your properties and your life but your sacred honor like the patriots of old in the support and protection of our country.

I therefore close with this statement. There is no fear of any economic crisis. There is no fear of any recession, provided we are dedicated. There is no fear of any external foe, of any rebel, of any secessionist, provided we are united. Provided we don’t fall into the old error of our race, into factionalism, into personal ambition and personal interest raised above the national interest; provided we do not again repeat the failure and the errors of the past; provided we act as a nation, as a Filipino people, no danger, no threat can weaken the Republic of the Philippines. And I trust that since the barangay has been strengthened as the basis and the foundation of our society, we will stand erect and strong, strong as the molave, upright even against the most severe storm and typhoon that may come from any part of the world.

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